TaxTMI 
TaxTMI 
2022 (7) TMI 418
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.... proceedings of penal action against M/s. V. Arjoon, CHA and held that they were rightly liable to penalty under Section 114 and 114AA of the Customs Act, 1962 read with Section 11(1) of the Foreign Trade (Development & Regulation) Act, 1992 (as amended), Rule 11 and 14(2) of the Foreign Trade (Regulation) Rules, 1993 read with provisions of Section 50 of the Customs Act, 1962. 2.1 That subsequent to the filing of appeal M/s. SSIGPL has filed an application for additional evidence which has been numbered as C/ORS/10859/2019and is being disposed of along with the present appeals. 2.2 The facts of the case are that M/s. SSIGPL had exported 37 consignments from Mundra Port and 13 consignments from ICD, Loni of rice to Iran during the period 16-01-2015 to 28-10-2015. The Directorate of Revenue Intelligence (hereinafter referred to as the DRI) started investigation against M/s. SSIGPL on an information that certain consignments of rice were exported to Iran but delivered/diverted/discharged at Jabel Ali Port, Dubai and sold in UAE whereas the payments were received from Iranian buyers in Indian currency in terms of a Treaty between India and Iran whereas the remittance should have bee....
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....e delivery of rice, was sent by them to the Iranian buyers after shipment through courier. On being asked about diversion to Dubai or other ports of rice exported to Iran by them, he stated that the instructions for diversion of shipments from Iran to Dubai were given by them in writing to their CHAs who used to pass on the same to the shipping lines. (v) A statement of Shri Sunjjoy Salve, Vice President (Western Region) of M/s. Goodrich Maritime Pvt Ltd was recorded on 30-12-2015 wherein he explained the process of preparation of Bill of Lading. (vi) Another statement of Shri Aman Gupta was recorded on 07-01-2016 wherein he inter alia submitted a list of 42 consignments shipped during the period 2014-15 to 2015-16 which were exported to Iran but later diverted to Jebel Ali, Dubai. He stated that initially, it was not known to them that the consignments would be discharged at Jebel Ali and the same were diverted at the instance of buyer after sailing from India. However, later on, in some cases, it was known to them in advance that the consignments would be discharged at Jebel Ali, Dubai but the export documents were prepared by showing the port as Bander Abbas at the ins....
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....n respect of these shipments was received from Iranian buyers and not from the buyers in Jebel Ali. 2.3 It may be stated that during the course of investigation, the CHA, the Shipping Lines submitted certain documents such as Bills of Lading etc to DRI which showed that the rice was first landed at Jabel Ali Port, UAE instead of Bandar Abbas Port for which the consignments were actually destined. 2.4 That since M/s. SSIGPL had exported 37 consignments from Mundra Port and 13 consignments from ICD, Loni, acommon show cause notice dated 02-06-2017 was issued to them which was made answerable to Joint/Additional Commissioner of Customs, Mundra and Joint/Additional Commissioner of Customs, ICD, Loni in which reliance was placed on the various statements and documents. The show cause notice was also issued to Shri Aman Gupta, Director, two CHAs, namely, M/s. V. Arjoon, Customs Broker and M/s. Seagull Maritime Agencies (P) Ltd. It was alleged that the goods had been shown in the export documents to be consigned to Iran but in fact the goods had been delivered/diverted/discharged at UAE. It was alleged that receipt of remittance in respect of export to Iran was regulated through provisi....
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....nsit and who were the absolute owners of the goods and all rights in goods vested with the buyer after the goods had been shipped out on board as well as when they were out of Indian territorial waters. According to him the receipt of remittances in respect of export to Iran was regulated through provisions of FTDR/FEMA and other applicable provisions of law. According to him in terms of para 2.40of FTP 2009-14 and para 2.52 of FTP 2015-20all export contracts and invoices shall be denominated either in freely convertible currency or Indian rupees but export proceeds shall be realized in freely convertible currency, thus the proceeds of the goods sold in UAE were mandatorily required to be realized in freely convertible foreign currency. He held that it was also evident from the records that the proceeds of impugned goods, exported to UAE had been realized in Indian currency through Iran. According to him the exports proceeds for exports to Iran were regulated as per para 2.53 of FTP. Therefore, realization of export proceeds from UAE in Indian Rupees was not permitted and the same was in violation to the Foreign Trade Policy. He held that M/s. SSIGPL had violated the provisions of ....
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.... the whole case of the DRI is based upon the statements of different persons including those of Shri Aman Gupta, Director of M/s. SSIGPL, two CHAs and representative of the Shipping Lines. These statements, which were recorded under section 108 of the Customs Act, 1962, are admissible as evidence only if the provisions of Section 138B of the Customs Act, 1962, would have been strictly complied with. In the present case the adjudicating authority did not follow the mandatory provisions of Section 138B ibid before placing reliance on the said statements. In support of his submissions he has relied upon the following judgments: * G-Tech Industries Vs. Union of India, reported in 2016 (339) ELT 209 (P & H). * Krishna Brothers v. Commissioner reported in 2017 (356) ELT 222(Ker.), * Hi-Tech Abrasives Ltd. Vs. Commissioner of Central Excise & Customs, Raipur, reported in 2018 (362) ELT 961 (Chhattisgarh). * indal Drugs Pvt. Ltd. v. Union of India -2016 (340) ELT 67 (P & H). * Commissioner of Central Excise, Delhi-1 Vs. Kuber Tobacco India Ltd, reported at 2016 (338) ELT 113 (Tri-Del.)] * Additional Director General (Adjudication) v. Its My Name Private Limited - 2021 (375) ELT....
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....IGPL and only the destination was changed after the ship had sailed from India, on the request of the buyer. Thus there was no mis-declaration by M/s. SSIGPL. He invited our attention to the statement dated 22-12-2005 of Shri Tushar H. Anam, partner of M/s. V. Arjoon, CHA wherein when asked as to why the change of port was not intimated to the Customs authorities he stated because cargo had already left Indian waters and reached Jabel Ali Port and exporter Shipping line had not requested for any amendment in the Shipping Bill. 3.5 The Ld. Advocate assailed the findings of both the authorities that M/s. SSIGPL had suppressed the material facts from the department by not amending the EGM and shipping bills as the goods were actually sold in UAE instead of exporting to Iran. It is his contention that Jabel Ali port was used only as a transit port. Consequently there was no requirement for amending the EGM and shipping bills as held by the lower authorities. 3.6 According to him Para 2.53 of the FTP provides that export proceeds can be realized in Indian Rupees against exports to Iran. It does not say that the goods have to reach Iran directly, non-stop. The FTP provisions do not bar....
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....d get a delivery order from the Shipping Agent and submit the documents such as commercial invoice, certificate of origin, detailed packing list, import permit, bill of lading or airway bill along with imported goods. Further in respect of food items the original health certificate is required to be obtained from appropriate government agency in the exporting country, attesting to the product's fitness for human consumption. It is his submission that in the present case all the documents as mentioned above were in the name of Iranian buyers. Therefore it was not possible to get the goods cleared in UAE without the various documents being in the name of UAE buyers. 3.9 The Ld. Advocate has further stated that in respect of food items Phytosanitary Certificate is mandatorily required.The said Phytosanitary Certificate is an official document required for exporting/re-exporting plants, plant products or other regulated articles. Phytosanitary Certificate is issued to indicate that the consignments meet specified Phytosanitary import requirements of importing countries. The Ministry of Agriculture and Farmer Welfare, Government of India issues Phytosanitary Certificate following the g....
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.... dated 24-02-2020 where he held that 49 transactions were effected as per law and there was breach of law only in one transaction that too both the importers were located at Iran. But even in that case it was not disputed that the goods were actually reached Iran but penal action was ordered on the ground that the payment was received from other entity in Iran itself. 3.12 It is his contention that the diversion, if any, in respect of the consignments in question took place when the goods were beyond the territorial waters of India and beyond the control of M/s. SSIGPL. It is his contention that as soon as the goods were handed over to the shipping Agent, M/s. SSIGPL no longer remained the owner of the goods. It was the importer at Iran who become the owner of the goods. Hence they cannot be blamed for diversion of the goods in UAE. In this regard, he has placed reliance on the following judgments: (i) Collector of Customs, Calcutta Vs. Sun Industries reported in 1988 (35) ELT 241 (SC). (ii) Terai Overseas Limited Vs. Union of India reported in 2001 (129) ELT 574 (Cal.). 3.13 The Ld. Advocate has also relied upon CBEC Circular No. 999/2015-CX dated 28-02-2015 wherein it has b....
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....er than Iran is a violation of Foreign Trade Policy. He further stated that diversion of goods to Dubai after clearance for Iran was not brought to the notice of Customs authorities at the port of export by exporters or shipping lines, because cargo had already left Indian waters and had reached Jebel Ali and Exporters/Shipping Line had not requested for any amendment in the Shipping Bill. (ii) That no malafide can be attributed to the CHA in the absence of any motive to unlawfully derive any gain. The role of the CHA is to file shipping bills on the basis of the documents provided by the exporter. That is clear from the statement of Shri Aman Gupta that the diversion was made at the instance of the importer due to heavy congestion on Bandar Abbas port. (iii) That ingredients of Section 114 and 114AA of the Customs Act are conspicuous by its absence in the facts of the present case. (iv) That the CHA has unblemished record and always taken due care in preparing true and correct documents and hence it cannot be alleged that there was a mis-declaration on the part of the CHA. That while dropping the proceeding against the CHA there was a categorical finding by the Ld. Additiona....
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....ct to contend that the Customs Authorities did not have any jurisdiction to issue the show cause notice for violation of the provisions of Foreign Trade Policy and FEMA. (viii) That in respect of the proceedings initiated by the FEMA authorities and the Order-in-original dated 24-02-2020 passed by the Assistant Director, Directorate of Enforcement wherein he categorically held that out of 50 consignments exported there was only discrepancy in one consignment, he has nothing to comment. (ix) In the facts and circumstances of the case M/s. SSIGPL and Shri Aman Gupta were rightly penalized and Collector (Appeals) rightly set aside the Order of the Ld. Additional Commissioner of Customs in which he dropped the proceedings. He therefore prayed for upholding the Order-in-Appeal. 6. We have carefully considered the various submissions made by both the sides and perused the records. Firstly we feel that the appeal of M/s. SSIGPL can be decided without seeking any help from the documents enclosed with additional evidence. The only issue which falls for our consideration is whether 50 consignments of rice exported by M/s. SSIGPL were sold in UAE or ultimately reached Iran after these ....
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....n the statements of Shri Aman Gupta the same could be clarified only when the adjudicating authority would have summoned him, examined him as a witness before him in the adjudication proceedings and arrived at an opinion that having regard to the circumstances of the case, the statements should be admitted in the interest of justice. This procedure is well laid down in the various judgments relied upon by the Ld. Advocate. 6.1 We have also examined all the 50 bills of lading and a separate chart prepared in this regard. The importers of Iran themselves had notified in 30 Bills of Lading UAE parties as 2nd party. M/s. SSIGPL had only requested to change the port in respect of five consignments that too after the cargo had left the port. Hence it can be concluded that this practice was adopted in anticipation of sudden congestion at Bandar Abbas Port and to ensure that UAE Party facilitate transshipment of the consignments from Jabel Ali Port to Bandar Abbas Port. 6.2 We have also gone through the procedure in respect of import of food items at UAE from different countries. The procedure of import goods is that the UAE-based company (consignee/agent) should get a delivery order fro....
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....ed at S.No. 25 of the table which was presented before the FEMA authorities. The discrepancy was with regard to invoice raised to ShirktTavoneiMarznashinan but the payment was received from ShekatMarznashinan and the acknowledgement was received from BehnazShabanpor. The value of the said consignment was Rs. 46,80,000/-. On the basis of the said complaint show cause notice dated 03-02-2020 was issued. The Adjudicating authority in his Order dated 24-02-2020 in para 7 has held that M/s. SSIGPL had executed 49 transactions as per law and there was breach of law only in one transaction that too both the importers are located at Iran. He, therefore, imposed penalty of Rs. 4,50,000/- upon M/s. SSIGPL and penalty of Rs. 50,000/- on Shri Aman Gupta under section 13 of FEMA, 1999. It is therefore seen that the FEMA authorities who have jurisdiction to investigate all the foreign currency related matters have categorically come to a finding that all the 50 consignments had duly reached Iran from Jabel Ali port, Dubai. Therefore, we have no material to disagree with the findings of the FEMA authorities that goods had ultimately reached Iran through Jabel Ali port, Dubai. 6.4 It is also pert....
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.... Ali port as after the 'let export order' was issued by the Customs authorities it was the importer at Iran who became the owner of the goods. In support of this finding we rely upon the CBEC circular No. 999/2015-CX dated 28-02-2015. This circular is with regard to at what point of time the transfer of property takes place in cases of exports. The CBEC has categorically provided that after the let export order is issued the transfer of property can be said to have taken place at the port where the shipping bill is filed by the manufacturer exporter. Further the Hon'ble Apex Court in the case of Collector of Customs, Calcutta Vs. Sun Industries reported in 1988 (35) ELT 241 has held in categorical terms that in case of exports the title of the goods gets transferred to the buyer as soon as the ship carrying goods crossed territorial waters of India. 6.7 We further find that in the present proceedings the only allegation and finding against M/s. SSIGPL is that they had violated para 2.53 of the FTP i.e. to say that since according to the Customs the goods were actually exported to UAE, the payments should have been received in convertible foreign exchange. The whole case revolves a....
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.... that FEMA authorities had initiated inquiries against M/s. SSIGPL and its director and they have penalized them with respect to only one consignment which was mentioned at S.No. 25 of the table which was presented before the FEMA authorities. But the crucial aspect of the matter is that in the adjudication proceedings by FEMA authority it has been held that all the 50 consignments ultimately reached Iran through Jabel Ali port, Dubai. 6.8 That keeping in view the totality of facts and circumstances of the case at hand there is no warrant to penalise M/s. SSIGPL again on the ground that the goods were actually sold in UAE and export proceeds were received from a third party in Iran. Further even on independent application of mind we have come to the conclusion that it is not a case where the goods were sold in UAE instead of exporting to Iran. The overwhelming evidence clearly establishes that Jabel Ali port was only used as transit port wherefrom the goods were further exported to Iran. Hence there is no justification for sustaining penalty upon M/s. SSIGPL under Section 114 and 114AA of the Customs Act. We therefore set aside the penalty upon M/s. SSIGPL. 6.9 Similarly since th....